Input Tax Research Articles

Value Added Tax Treatment on Health Services After Harmonization of Tax Regulations Law

One of the changes related to Medical Health Services after the enactment of the VAT Cluster Law on the Harmonization of Tax Regulation is the provision of VAT exemption facilities for these services. This change is further regulated in Government Regulation no. 49 of 2022. This study aims to examine VAT on Medical Health Services after the enactment of the Law on the Harmonization of Tax Regulations and the policy implications of VAT exemption on medical health services for the community as the end consumer. The research method used in this research is descriptive qualitative with the use of secondary data. The results of this study conclude that service providers are obliged to be confirmed as Taxable Entrepreneur to collect VAT for people who do not use health services not borne by the government. However, Taxable Entrepreneur cannot credit its input tax.

Is Provision of Medical Instrument for Use Without Any Consideration a Supply Under GST?

With the advent of GST in India, supply became the taxable event and this made the place of supply and time of supply particularly, and the act of supply in general significant. The GST laws mandate registration under section 22 of the Central Goods and Services Tax Act, 2017 (hereinafter referred as the CGST act, 2017) for all business. Almost every realm of service is now covered under the scope of supply under section 7 of the CGST Act, 2017 and free supplies are also clearly covered within the scope of the said section. Few Pharmaceutical companies are engaged in importing and distributing medical equipment and providing healthcare solutions in India and beyond. These Companies place certain medical equipment at unrelated hospitals, labs etc., on a free-of-cost basis in exchange of a minimum purchase obligation arising out of an agreement between its clients. In a sequence of rulings from the AAR to the Kerala High Court and back to the AAR, questions regarding a unique case of free supply of Taxable Pharmaceutical Instruments based on a periodic supply contract was presented before the Authority. The discussed rulings answered what is Periodic Supply Contracts, Composite Supply, Naturally Bundled Supply and Indivisible Supply and raised various new questions and avenues for discussion. And, this article, in particular, attempts to analyse the nature of such purchase agreements and the possibility of availing Input Tax Credit on the medical instruments.

China's value-added tax policy and intertemporal optimal assets allocation of enterprises--Based on the dual perspectives of VAT input refund and VAT rate.

The article sought to detect the impact of the value-added tax (VAT) policy on the enterprises' asset allocation from the dual perspectives of the VAT input refund and the VAT rate. Based on the influenced mechanism of the VAT input refund and the tax burden effect (and the price effect) caused by the VAT rate, enterprises' intertemporal optimal asset allocation models are constructed under the states of adopting the VAT input refund and maintaining the theoretical tax (non-)neutrality of VAT. When VAT rates of the general taxpayers are predicted to be reduced, we also use China's manufacturing and economic data to simulate specific cases to verify propositions under different states. The results show that: (1) When the VAT output tax rate decreases: if returns to scale are diminishing, enterprises will increase the number of productive material assets and labor and reduce financial assets. (2) When the VAT input tax rate reduces: under the state of adopting the VAT input refund and maintaining the theoretical tax (non-)neutrality of VAT, if returns to scale are decreasing, enterprises will reduce the number of productive material assets and labor and increase financial assets. Under the state of adopting the VAT input refund and maintaining the theoretical tax neutrality of VAT, if returns to scale are increasing and the expected rate of return of financial assets is lower than the additional tax rate, or the enterprise has diminishing returns to scale and the expected rate of return of financial assets is higher than the additional tax rate, enterprises will increase the number of productive material assets and labor. (3) When VAT output and input tax rates reduce simultaneously: under the state of adopting the VAT input refund and maintaining the theoretical tax neutrality of VAT, if returns to scale are increasing and the expected return rate of financial assets is higher than the additional tax rate, the enterprise will reduce the number of productive material assets and labor and increase financial assets. Under the diminishing returns to scale in China's national economy, the research conclusions endorse the rational necessity of the VAT policy change-VAT rate reduction to develop the entity economy and provide a reference for enterprises to make asset allocation decisions. The conclusions also provide possible changes in VAT policy for different countries according to their actual economic conditions.

ANALISIS PERENCANAAN PAJAK (TAX PLANNING) PADA PT PRATAMA GRAHA SEMESTA

According to Law Number 36 of 2008 there are two Tax Subjects, namely, Domestic Tax Subjects (SPDN) and Foreign Tax Subjects (SPLN). One of the Domestic Tax Subjects is a Business Entity that has the largest contribution in tax revenue. The tax that must be paid by the Business Entity depends on the profit it generates each year. The higher the profit, the higher the tax. Therefore, to minimize tax payments according to the rules of the taxation frame, Tax Planning is needed, namely several ways to minimize the tax burden without having to violate the tax law. In writing this final project, two methods are used, namely the Observation Method and the Documentation Method. The data used are the Income Tax Return, VAT, and the Financial Statements of PT Pratama Graha Semesta 2020. The results of this final project research, Tax Planning at PT Pratama Graha Semesta utilizes the Government Borne Income Tax (DTP) incentive according to PMK 09/PMK.03 /2021 such as PPh Article 21, PPh Article 22 Imports, Reduction in Installment of PPh Article 25 by 50%, optimizing credit for input tax invoices through the e-invoice application on the Prepopulated VAT menu, collecting evidence of withholding income tax, minimizing the tax burden on Article 23 PPh, avoiding sanctions fines by setting the payment date and separate tax reporting, as well as conducting fiscal reconciliation. So with Tax Planning, tax financing can be well organized.

Exploring the World of Input Tax Credit (ITC)

Exploring the World of Input Tax Credit (ITC)

Analisis Perhitungan Dan Pelaporan Pajak Pertambahan Nilai Atas Pengadaan Barang Pada PT. Daya Surya Sejahtera

This study aims to determine the calculation and reporting of value added tax on the procurement of goods at PT. Daya Surya Sejahtera. Data collection methods used are documentation and interviews. The method is used to obtain data, namely data on purchases and sales in 2019. The stages in analyzing the data in the study are as follows: collecting value added tax data, analyzing the calculation and reporting of value added tax, and drawing conclusions from the results of calculation and reporting of value added tax. Calculation and reporting of Value Added Tax of PT. Daya Surya Sejahtera is in accordance with applicable laws. From the calculation results, PT. Daya Surya Sejahtera is underpaid because the Output Tax is greater than the Input Tax. If there is an underpayment, PT. Daya Surya Sejahtera will make a deposit at the end of the following month.

Discussion on Intentional or Negligent False Reporting of Input Tax Amount in Business Tax:Comment on the Supreme Administrative Court Judgement No. 436 in 2021

營業人取得不實進項憑證，申報扣抵銷項稅額之逃漏稅行為，如何認定係故意或過失？依稽徵實務觀察，一般情況下大多採簡單的二分法，稽徵機關查核時著重釐清營業人有無進貨事實，憑以判斷核課期間及違章裁罰倍數。本文以最高行政法院110年度上字第436號判決為例，說明法院的不同觀點。

Analysis of the Flow of Money Flow of Goods in the Context of Proving Defective Tax Invoices against Tax Auditor Findings in 2019

The purpose of this research is to determine the analysis of the flow of money, the flow of goods in the context of proving defective tax invoices in refuting the findings of the examiner at PT Pionirbeton Industri. The type of research applied is qualitative research with a descriptive approaches. The results showed that there were factors causing defective tax invoices that became the findings of the examiner, one of which was the human factor, namely the vendor did not deposit VAT on the tax invoice issued to PBI and did not report it to the tax office, for these findings can be proven by using the goods flow money flow report which focuses on tracing the process of receiving goods to the payment process. With the flow of money the flow of goods succeeded in proving that the input tax invoice was defective and avoided the potential to pay IDR. 813,169,623 and avoided an additional fine of 100% so that the total loss of PBI was IDR. 1,626,339,246.

Calculation of Value Added Tax as A Tax Obligation for Taxable Entrepreneurs

The economic activities that we carry out on a daily basis, consciously or unconsciously, actually come into direct contact with taxes, namely VAT (Value Added Tax). VAT is a levy imposed on a sale and purchase transaction of Taxable Goods/Services conducted by a Taxable Entrepreneur (PKP). PKP can be subject to sanctions in the form of administration such as fines and/or interest to criminal sanctions if they are late in making tax invoices and reporting periodic tax returns. Calculation of VAT Value, which includes Input VAT and Output VAT is carried out, to determine Underpaid VAT or Overpaid VAT on the Periodic Tax Return Report. The purpose of the research is to find out how the mechanism for collecting and calculating VAT obligations for PKP, and calculating the value of PKP Input and Output VAT. At this writing the writer uses descriptive qualitative methods and literature studies. Output tax is the same as sales transactions, input taxes are the same as purchase transactions. Input Tax in a Tax Period is credited with Output Tax in the same Tax Period, in accordance with statutory provisions. Credited Input Tax must use a Tax Invoice. Tax Invoice is proof of tax collection made by a Taxable Entrepreneur who delivers Taxable Goods or delivers Taxable Services. If the output tax is greater (>) than the input tax, then the PKP pays VAT to the state treasury. The output tax is less (<) than the tax, so the excess VAT is compensated for the next tax period. Credited Input Tax must use a Tax Invoice. Tax Invoice is proof of tax collection made by a Taxable Entrepreneur who delivers Taxable Goods or delivers Taxable Services. If the output tax is greater (>) than the input tax, then the PKP pays VAT to the state treasury. The output tax is less (<) than the tax, so the excess VAT is compensated for the next tax period.

Impact of Goods and Services Tax on Indian Economy – Logistic Sector

Important new legislation in India is the Goods and Services Tax (GST). The GST Act bill was first adopted by the Rajya Sabha on August 6, 2016, and then by the Lok Sabha on August 8, 2016. On July 1, 2017, the legislation will go into force. All value creation is subject to the Goods and Services Tax (GST), which is a multi-stage, destination-based tax. Products and services are subject to this kind of tax based on the location of the final consumer. It is proposed that all steps, from manufacturing to consumption, be taxed, with the potential to reclaim taxes already paid. In a nutshell, the final customer is liable for all taxes, and value added to a product or service is subject to taxation. Input Tax Credit (ITC) was made accessible across the whole value chain, and the government benefited greatly from this since GST consolidated a broad range of national and state taxes on most goods and services. The number of tax brackets has decreased to a historic low. The creation of a consolidated digital platform for use by taxpayers is also well underway. More than 26 months and many policy changes later, it seems that not everything has gone as planned. This, however, was not completely out of the question, and the government was prepared to suffer short-term losses in exchange for long-term gains. The tax rates and number of tax bands under India's Goods and Services Tax (GST) are among the highest and most extensive in the world. The rising technical and regulatory obstacles only make life more difficult. The government has enhanced the GST collection goal to Rs. 1.10 crore per month commencing in December 2019 to guarantee revenue collection according to objectives. It is the duty of GST officers to ensure that the appropriate GSTR-1 and 3B returns are filed if penalties or fines were waived at a recent GSTC meeting. Taxpayers who want to avoid penalties must come forward and file their returns by January 10, 2019. The existing GST cannot be considered flawless since it does not apply to all products and services, there are difficulties to collecting input tax credits, and GST rates are often skewed.

The impact of greater VAT tax neutrality on total factor productivity: Evidence from China’s VAT credit refund reform in 2018

Prior to 2018, Chinese enterprises registered for Value Added Tax (VAT) were required to carry forward excess input tax credits indefinitely. Following the 2018 VAT Credit Refund Reform, enterprises became entitled to refunds on excess input tax credits, as is standard in a conventional VAT system. The reform significantly enhanced tax neutrality, which might have been expected to have impacted production efficiency. This study employs a difference-in-differences (DID) method of analysis, using the commencement of the 2018 reform as the focal point, to highlight how from 2014 to 2020 certain Chinese enterprises received fiscal benefits from the reform while others did not. The conclusion is striking; enterprises that were able to obtain VAT refunds increased their total factor productivity by 6.96% compared to those that received no fiscal benefit from the reform. The outcome reflects the impact of the VAT credit refund as a source of financing for these firms, leading directly to increased investment, or, in the case of high-tech enterprises, increased R&D. The impact of this change is particularly pronounced in private enterprises and growing businesses. Our study provides evidence of the benefits of VAT reform in the direction of neutrality by providing swift and full refunds for excess input tax credits.

Analysis of Tax Planning Implementation to Minimize Value Added Tax Load

As a sizable source of state revenue, of course taxes are also a problem for the community, because taxes are in almost every activity we carry out, starting from Value Added Tax (VAT), Income Tax, and Sales Tax on Luxury Goods, and other taxes. This consider points to see how the execution of charge arranging to play down the assess burden payable esteem included assess at PT. Mobar Sarana Energi. The object of this research is tax planning and minimizing the tax burden payable for value added tax. The research method used was a qualitative study through a case study method, and the data obtained were both primary and secondary data. Primary data from interviews, observations and documents, then secondary data from company records or sales tax data. From the results of research in 2019 and 2020, it was found that by implementing tax planning on VAT with the mechanism of delaying input tax credits and compensation, it was able to equalize VAT while purchasing taxable goods/ services with VAT would be able to reduce the tax burden owed by 6.8 percent.

Do South Africa’s e-commerce VAT rules measure up to international trends and OECD guidelines?

Orientation: The taxability of e-commerce transactions have been the subject of many studies to protect governments from Value-Added Tax (VAT) erosion, illegal recovery and fraud.Research purpose: This study critically analyses the challenges posed by e-commerce transactions in South Africa’s VAT Act. Recommendations are made for amendments to the VAT Act to improve rules to effectively tax e-commerce transactions occurring in South Africa.Motivation for the study: Globally, including in South Africa, enforcing relevant VAT legislation to target output tax collections and input tax credits from e-commerce transactions aptly remains a challenge.Research approach/design and method: By integrating qualitative literature reviews and comparative synthesis, this study employed a comparative legal methodology. VAT levied on e-commerce transactions in South Africa is compared to the Organisation for Economic Co-operation and Development’s guidelines as well as New Zealand’s and Australia’s Goods and Services Tax legislations.Main Findings: While the South African VAT Act aligns with international best practices on the use of intermediaries, there are some differences as detailed in the study.Practical/managerial implications: To align with international trade counterparts, the South African VAT Act should differentiate between business-to-business and business-to-consumer sales. A provision concerning the place of consumption for bundled goods should be included in the VAT Act. The VAT Act should contain a provision that allows bad debts to be claimed on cash sales made instead of total sales made.Contribution/value-add: This study harmonises South African VAT legislation with international best practices within the context of continual advancement of e-commerce transactions.

VAT fraud and reverse charge: empirical evidence from VAT return data

In order to stop Value-Added Tax (VAT) fraud, EU member states use the so-called reverse-charge (RC) mechanism, which effectively removes VAT withholding and refunding in business-to-business transactions. Using the German VAT return data, we examine the effects of the introduction of RC and find that requests of input tax refunding decline sharply in the affected industries, supporting the presence of fraud prior to the introduction of RC. Based on our estimates, we quantify the revenue losses from VAT fraud prior to RC implementation in these industries to be around 5% of VAT revenues.

IMPLICATIONS OF THE PROPOSED COMPREHENSIVE CHANGES IN FORM GSTR-3B ON TAX COMPLIANCE

Tax compliance through filing of GST returns is a critical process because it authenticates tax payments, qualifies for input tax credits and ensures timely tax refunds. For this purpose, the Government has introduced various forms under GST law, including FORM GSTR-3B[1]. It is a summary return that was initially introduced as a temporary return to collect the tax amount from the taxpayer. However, it is designated as a default return on the advice of the GST Council. Considering the shortcomings of the existing GSTR-3B, discussions on comprehensive changes in Form GSTR-3B were held in the 47th Meeting of the GST Council on June 28 and 29, 2022, and the concept paper on comprehensive changes to Form GSTR-3B is published for public review to solicit views, comments, and suggestions2 . This research paper is an attempt to review the proposed changes in Form GSTR-3B, gauge their implications on tax compliance by the taxpayers and propose measures to strengthen GST compliance.

Analysis on the False Input Tax of Article 51 of the Business Tax Act

Analysis on the False Input Tax of Article 51 of the Business Tax Act

Wiążące ustalenia prawomocnego wyroku skazującego w świetle art. 11 Prawa o postępowaniu przed sądami administracyjnymi na przykładzie prawa do odliczenia podatku od towarów i usług

This study is devoted to the issue of binding an administrative court with the findings of a final conviction. Article 11 of the Law on Proceedings before Administrative Courts has a significant impact on the determination of the facts. It is worth considering its meaning in the context of Article 45 (1) of the Constitution of the Republic of Poland, which ensures the right to a fair trial and fair proceedings. Using the linguistic interpretation, it can be argued that Article 11 of the Law on Proceedings before Administrative Courts does not allow to demonstrate circumstances excluding or limiting the taxpayer’s liability as regards the deduction of tax on goods and services. Pursuant to Article 88 (3a) (4) (a) of the Act of 11 March 2004 on Tax on Goods and Services, invoices and customs documents do not constitute the basis for the reduction of the tax due and the refund of the tax difference or the return of input tax if the issued invoices, corrective invoices or customs documents state activities that have not been performed – in the part concerning these activities. The main research intention of the article is to characterize the impact of Article 11 of the Law on Proceedings before Administrative Courts to retain the right to deduct tax on goods and services. The aim of the study is also to indicate to what extent and on what basis the legislator assumed that the developed legal solution will determine a well-functioning model of the right to a fair trial.

Forum Contributions: CJEU Case Law on Exercising Rights Under EU VAT: Is There a Golden Thread in the Distinction Between Substantive and Formal Conditions?

Exercising rights under EU Value Added Tax (‘VAT’) law (for example recovering input tax) is often subject to certain conditions. A distinction however exists between substantive and formal requirements: Non-fulfilment of the latter does not need to be fatal for a taxpayer’s claim. That being the case, the question arises how a condition can be classified as either ‘substantive’ or ‘formal’. The author summarizes the case law of the Court of Justice of the European Union (‘CJEU’) in the area and notes that the Court has so far refrained from providing an all-encompassing test. The article therefore explores whether a golden thread can be identified and analyses if the Court may have had a general principle in mind when labelling conditions as ‘formal’ in judicial precedent. VAT, CJEU, substantive, formal, invoice, intra-Community supply

Aantekening: Denkbeeldige insetbelasting op tweedehandse vaste eiendom: Te goed om waar te wees, of nie goed genoeg nie?

While it might sound too good to be true, an input tax deduction may in certain circumstances be claimed even where no value-added tax (VAT) is paid. To prevent double taxation in respect of second-hand goods, a VAT vendor who purchases such goods without paying VAT may make a deduction of notional input tax of, generally speaking, the trapped VAT portion of its purchase price. As only its margin (namely the difference between its purchase and selling prices) will, effectively, be subject to VAT, this also ensures that VAT is levied only where value is added by a VAT vendor. However, the entitlement to a deduction of notional input tax has resulted in unacceptable VAT avoidance and evasion by way of the creation of artificial structures to qualify for the deduction or to fraudulently inflate the amount of the deduction. Although the incentive for such structures relating to fixed property has largely been eliminated by various VAT amendments, exploitation has also been experienced in respect of other second-hand goods. On the one hand, this raises the question whether the policy objectives are worth the inherent risk of non-compliance and the effort to protect the integrity of the VAT system and the fiscus. On the other hand, when a VAT vendor has to pay transfer duty, it is not allowed to take the transfer duty into account when calculating its notional input tax. The purpose of this note is to provide an overview of the circumstances when notional input tax may be claimed, to reflect on the policy objectives thereon, the exploitation thereof and the sanctions imposed to protect the fiscus, in order to evaluate whether the concession is too good to be actually true and, should it be justifiable, to call for an interpretation in line with the policy objectives and to submit that amendments should be introduced to ensure that the concession is good enough.

Procedural Changes in Indian GST Law: Impact on Working Capital Requirements of Indian Businesses

The seamless availability of the input tax credit is at the heart of the goods and services tax (GST) system. However, due to administrative challenges in implementing the GST, certain procedural changes have been made regarding provisional credit, offset rules and maximum credit restrictions which have affected the working capital requirements of Indian businesses. In this article, the author deliberates on these changes and reflects on their impact on the working capital requirements of Indian businesses.